Oil prices jump most in 6 years as Iran war drives surge

Oil prices jump recorded their biggest one-day increase in six years, climbing sharply as fears grew that the conflict involving Iran could drag on.

U.S. crude rose nearly 12% to above $111 per barrel, while Brent crude climbed close to $109. The surge began during a national address by Donald Trump and continued through the following trading session.

The move has already translated into higher fuel costs. The national average price for gasoline reached $4.08 per gallon, up significantly from pre-war levels, while diesel climbed to $5.51.

Markets swing as investors react to mixed signals

Financial markets struggled to find direction. U.S. stocks dropped sharply early in the day before recovering on shifting headlines about the conflict.

The S&P 500 and Nasdaq closed slightly higher, while the Dow Jones Industrial Average ended modestly lower. Smaller-company stocks outperformed, reflecting uneven investor sentiment.

A brief wave of optimism followed comments from an Iranian official suggesting a future plan for navigation through the Strait of Hormuz. However, oil markets remained largely unmoved, continuing their upward trend.

War uncertainty and energy supply fears drive prices

At the center of the surge is uncertainty over the Strait of Hormuz, a key passage for global energy flows. More than 20% of the world’s oil supply typically passes through the waterway.

Trump suggested the route would eventually reopen but did not present a clear plan. He also signaled that military operations would continue for several weeks, reinforcing concerns about prolonged disruption.

Analysts warn that continued escalation could damage infrastructure and extend supply constraints, keeping pressure on energy prices.

Inflation concerns return as costs rise

The sharp rise in oil is feeding broader economic concerns. Higher energy costs are pushing up transportation and production expenses, raising the risk of renewed inflation.

Yields on U.S. government bonds have increased since the conflict began, reflecting expectations of sustained price pressures. Mortgage rates have also climbed, adding strain to the housing market.

Economists at Bank of America now expect inflation to approach 4% in the near term, significantly above recent levels.

Outlook tied to conflict trajectory

The trajectory of oil prices jump will depend largely on how the conflict evolves. Without a clear path to a ceasefire or a strategy to stabilize supply routes, volatility is likely to persist.

For now, energy markets—and the broader economy—remain tightly linked to developments in the Middle East, with consumers already feeling the impact at the pump.